Atlanta City Council passes Inclusionary Zoning (apartment complexes, rent, how much)

[cqholt]

Does it go far enough?

The City Council voted this week to apply the requirement, called inclusionary zoning, to neighborhoods near Mercedes Benz Stadium and the Atlanta BeltLine.

That means developers there now will have to dedicate a portion of their units to people making 60 to 80 percent of area median income.

Developers can choose between making 10 percent of units available to 60 percent area median income or 15 percent of units to 80 percent area median income.

https://www.wabe.org/first-atlanta-r...ound-beltline/

[primaltech]

How are they calculating this median income figure? Are Atlanta residents required to report how much they make?

[cqholt]

Also passed yesterday

“The City of Atlanta today announced that the Atlanta City Council has passed ordinance 17-0-1654, which will require all new residential homes and public parking facilities to accommodate electric vehicles (EV),” a press release from the city of Atlanta says. “The ordinance requires 20 percent of the spaces in all new commercial and multifamily parking structures be EV ready; it also requires that all new development of residential homes be equipped with the infrastructure needed to install EV charging stations, such as conduit, wiring and electrical capacity.”

City of Atlanta requires builders to consider electric vehicles during construction - The Atlanta Loop

[bryantm3]

from a policy perspective i don't see what this does other than slow down the process. if the area is being gentrified, the median income is going to go up, and so will these "reduced rents". this is one of those measures government does to save face rather than actually solving the problem.

[jsvh]

In the year this law has been in effect, only two new developments have been permited in the zone. It appears the law is have a pretty significant effect on reducing housing supply. Likely do more harm to affordability than good as a result.

CoA is now considering expanding the inclusionary zone: City officials eye inclusionary zoning expansion, as affordable housing remains top priority | ABC

Barely a year after rules went into effect requiring apartment developers to include affordable units in their new projects within some of the city of Atlanta’s most rapidly gentrifying neighborhoods, city officials are exploring an expansion of the so-called inclusionary zoning to cover more intown housing.

...

“It takes away the income that, for many, was making these projects work,” Toro said. “It’s a challenge we face in advancing affordable housing in Atlanta, unless we are provided both the carrot and a stick.”

In the analogy, the carrot is some level of incentives, Toro said. Otherwise, the projects don’t always pencil out.

...

Since inclusionary zoning went into effect last January, only two projects have received permits to move forward with development in the BeltLine and Westside overlay districts, according to city officials.

...

Atlanta Mayor Keisha Lance Bottoms, who struck a sweeping deal with CIM Group that included more citywide funding for affordable housing, said she’s heard the concerns about inclusionary zoning.

“There’s always the possibility that it can be tweaked, if it’s not working the way it should,” she said.

But, she added, “The overall concerns addressed by inclusionary zoning continue. It’s about affordability.”

[ATLTJL]

Two questions:

1) When you open up a housing choice to below fair market value, you're obviously going to have a lot of interest. How do you decide who gets the property while keeping the process transparent and fair?

2) What does "EV ready" even mean? EVs don't have any requirements beyond traditional cars for parking. I assume they mean they have to offer charging? I don't know if I think this needs to be legislated. You already see businesses and apartment complexes offering this, I think the free market will push the move more effectively than legislation would, but whatever.

[fourthwarden]

So, I decided to do some math to see why exclusionary zoning doesn't really work.

Let's say you have a developer who has figured out that a 20-unit development is workable at 100% Median Area Income, which is, for this scenario, $100. Basically, the developer needs $2000 total from their units to not only afford construction costs and financing, but to make enough profit to actually green-light the project in the first place.

Now let's say there's a mandatory affordable housing law, that requires 25% of new units to be marked at 80% MAI. That means that five of the 20 units are now marked at $80 each. Well, the minimum returns from the units to be able to justify the project still hasn't changed. The Developer still needs a total of $2000 to make this work. So, the remaining 15 units need to cover the remaining $1600 worth of return, or need to be $106.67 each.

So, what's happened? The minimum needed return didn't change, it's still $2000. Given that the number of units didn't change, the average housing costs stayed the same at $100 per. What did change, are the available price points.

Before you had 20 units that anyone able to pay at least $100 could afford. Now you have 5 units that anyone able to pay at least $80 can afford, and 15 unites that anyone able to pay at least $107 can afford. Assuming that the $100 people can compete for the $80 units, then you're leaving 15 $100 people unable to afford housing. Those who do make it into the complex are just pushing out people who can only afford $80 units, which defeats the whole purpose of the affordable housing in the first place. If not, then you're leaving all 20 of them unable to afford housing.

You can see the image of the two scenarios here:




What's worse, is that the $107 units may be too expensive for the amenities provided in the development plan. Basically, everything was designed for people who could afford up to $100, but any persons paying more than that demand better amenities to justify the costs. Those amenities cost more to put in, driving up the cost of the development, and actually raising rents to reach the new equilibrium. If that happens, then average unit housing prices do go up.

Even worse yet, even though there was demand for $100 units, there may not be demand for anything higher than that. Say, if the 'luxury' market has been saturated. So, the developer may not be able to justify a $107 max rent development, when they could have justified a $100 max rent development. That means that no new units get built, affordable or otherwise.

[arjay57]

If developers can make money on affordable multi-unit housing, you'd think they'd be all over it.

[Saintmarks]

Originally Posted by fourthwarden

So, I decided to do some math to see why exclusionary zoning doesn't really work.

Let's say you have a developer who has figured out that a 20-unit development is workable at 100% Median Area Income, which is, for this scenario, $100. Basically, the developer needs $2000 total from their units to not only afford construction costs and financing, but to make enough profit to actually green-light the project in the first place.

Now let's say there's a mandatory affordable housing law, that requires 25% of new units to be marked at 80% MAI. That means that five of the 20 units are now marked at $80 each. Well, the minimum returns from the units to be able to justify the project still hasn't changed. The Developer still needs a total of $2000 to make this work. So, the remaining 15 units need to cover the remaining $1600 worth of return, or need to be $106.67 each.

So, what's happened? The minimum needed return didn't change, it's still $2000. Given that the number of units didn't change, the average housing costs stayed the same at $100 per. What did change, are the available price points.

Before you had 20 units that anyone able to pay at least $100 could afford. Now you have 5 units that anyone able to pay at least $80 can afford, and 15 unites that anyone able to pay at least $107 can afford. Assuming that the $100 people can compete for the $80 units, then you're leaving 15 $100 people unable to afford housing. Those who do make it into the complex are just pushing out people who can only afford $80 units, which defeats the whole purpose of the affordable housing in the first place. If not, then you're leaving all 20 of them unable to afford housing.

You can see the image of the two scenarios here:




What's worse, is that the $107 units may be too expensive for the amenities provided in the development plan. Basically, everything was designed for people who could afford up to $100, but any persons paying more than that demand better amenities to justify the costs. Those amenities cost more to put in, driving up the cost of the development, and actually raising rents to reach the new equilibrium. If that happens, then average unit housing prices do go up.

Even worse yet, even though there was demand for $100 units, there may not be demand for anything higher than that. Say, if the 'luxury' market has been saturated. So, the developer may not be able to justify a $107 max rent development, when they could have justified a $100 max rent development. That means that no new units get built, affordable or otherwise.

You would think the city would chip in someway with some kind of incentive to entice developers to do this. Tax relief, city owned property at a discount, something....

[samiwas1]

Originally Posted by fourthwarden

So, I decided to do some math to see why exclusionary zoning doesn't really work.

Let's say you have a developer who has figured out that a 20-unit development is workable at 100% Median Area Income, which is, for this scenario, $100. Basically, the developer needs $2000 total from their units to not only afford construction costs and financing, but to make enough profit to actually green-light the project in the first place.

Now let's say there's a mandatory affordable housing law, that requires 25% of new units to be marked at 80% MAI. That means that five of the 20 units are now marked at $80 each. Well, the minimum returns from the units to be able to justify the project still hasn't changed. The Developer still needs a total of $2000 to make this work. So, the remaining 15 units need to cover the remaining $1600 worth of return, or need to be $106.67 each.

So, what's happened? The minimum needed return didn't change, it's still $2000. Given that the number of units didn't change, the average housing costs stayed the same at $100 per. What did change, are the available price points.

Before you had 20 units that anyone able to pay at least $100 could afford. Now you have 5 units that anyone able to pay at least $80 can afford, and 15 unites that anyone able to pay at least $107 can afford. Assuming that the $100 people can compete for the $80 units, then you're leaving 15 $100 people unable to afford housing. Those who do make it into the complex are just pushing out people who can only afford $80 units, which defeats the whole purpose of the affordable housing in the first place. If not, then you're leaving all 20 of them unable to afford housing.

It seems to me that the better alternative would be that an area has to have a certain amount of affordable housing, rather than each project. Of course, the reason it's not like this is because who would build the affordable units? Outside of that, just make the affordable units in each project smaller with fewer amenities, and the other ones larger with more amenities. Then, the people who can spend more aren't going to be looking at the smaller units as much.